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Business Insurance Spotlight: Disaster Preparedness

The impact of a disaster on a business is significantly different from the challenges faced by a homeowner. If you own a business, do you have an emergency plan in place if disaster strikes? If you don’t already have an emergency plan in place, it’s vital that you create one with the help of emergency planning services if you need it. Not having an emergency plan can be detrimental and lead to many more problems compared to if you have one written up. Do you know what your business insurance policy covers in the event of a natural or man-made disaster?

What is Covered

In the wake of a disaster, a business insurance policy will cover three main areas: property damage, loss of income, and liability protection. Hurricanes and fire damage (whether from lightning strikes or lava flow as we’ve recently seen in Hawaii) are covered. However, both flooding and earthquakes require separate insurance. It’s important to assess the region where you operate your business to determine what type of natural disasters to prepare for. It’s always better to be prepared for any potential flooding damage as it can ruin a lot of things. Any electrical devices in the business are likely to be broken after a flood, meaning that the company will have to spend a lot of money replacing all of that equipment. Additionally, any data on those computers is likely to be lost, unless companies like DriveSavers are contacted. They should be able to help companies restore this data that may have otherwise been lost.

Prepare and Assess

The Federal Emergency Management Agency (FEMA) urges that every business owner should have a plan in place for their business in the event of a man-made or natural emergency. The Insurance Information Institute (III) also recommends putting a disaster plan in place from day one. This includes a detailed outline of the steps taken during and after a disaster.

1. Preplanning

Determine what is most necessary to get your business running again after an emergency event. Keep emergency procedures updated and available to employees at every level. Communicate your plan through multiple channels on a regular basis. Know how you will communicate during and after a disaster. Many organizations and businesses use a phone tree that starts from the company leadership. For ideas on what to plan for and how to outline a plan, FEMA offers ideas and literature on their website. Keep insurance information in a safe place. Before an event occurs, it’s important to also consider how a natural disaster could impact your business’ finances. Some business owners monitor this by using software for scenario planning. This helps them to replicate a number of scenarios, allowing the business owner to see how different events and decisions will impact the business.

Getting your business back on track can be a lifeline for your community and your employees. It is essential that you identify what elements of your business are crucial to operation. Since so much of business is done digitally, how will you account for loss of power? Do you have key files backed up on a digital device that can use battery power or a generator? If you don’t have a backup generator, you might consider having one installed. Backup generators run independently of the usual electric network. Electricians similar to Electrical Synergies, LLC may be able to assist you with recommending and installing a backup generator for your business.

2. After the Event

Once you assess damage and take care of the needs of your employees, contact your insurer. Find out what documents you’ll need to show your provider and secure them.

Basic business insurance policies cover loss of net income. But what if your business is affected by damages incurred by your supplier or major clients? What if you need to move your business to an alternate location until major repairs are completed? To deal with these uncertainties, you may need to include extra expense insurance and business interruption insurance as an addition to your policy.

Peace of Mind

Preparing a disaster plan for your business may seem like a monumental task, but the truth is, the more prepared you are, the faster your business will bounce back in the wake of an emergency. As we see the effects of devastating hurricanes, destructive lava flow, and man-made incidents of terror, now more than ever, it’s an essential tool for a business. Have candid conversations with employees representing all areas of your business as well as varied leadership levels. Once you establish protocol, it will be easier to update an existing plan. Talk with your insurance provider to understand your coverage and deductibles. And as always, plan to keep your staff and assets safe.

Want to review, update or open a business insurance policy? Contact our experts at Fudge Insurance and let us help you find the best coverage to fit your needs.

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